As per the experts, the State Bank of Pakistan (SBP) is anticipated to keep the interest rate at 7 percent for the span of the next 2 months when they issue a statement on the upcoming monetary policy on the 21st of September for easing the availability of finance for businesses which are still in the recovery phase from the destructive impact of the coronavirus.
The CFA Society Pakistan has revealed an MPS survey indicating that ninety-one percent of the research analysts like the security analysts, fund managers, and the economic professionals have said that the State Bank would be changing the interest rates, but 9 percent have indicated that the interest rates would further decrease by 25 to 50 basis points to a figure of either 6.75 or 6.5 percent respectively.
The State Bank of Pakistan reviews its policy rate after every 2 months, thus affecting the actual interest rate in the market as the significant rates of lending and borrowing like KIBOR are floated on its basis. Therefore, a change in the policy rate is positively linked with the rates which are offered to the borrowers eventually by the commercial banks.
Low-interest rate offers an incentive to do the borrowing and invest instead to save and deposit money and vice versa.
Previously, due to the economic impacts of the coronavirus, the State Bank of Pakistan had decreased the policy rate from 13.25 percent on the 17th of March this year, to 7 percent in order to facilitate the investment and offer ease of accessing to finance.
Therefore, if the interest rate remains the same, the economic bodies which include the businesses, government, and individuals would borrow more for restoring their financial position.
Experts are also of the opinion that the interest rate might surge to 0.5 percent to 1 percent in 2021.